Revisiting the Risks Posed by Wildfires

Early property insurance policies, first introduced in seventeenth century England, insured against only a single peril: fire. That made sense at the time—most structures were wooden, making fire the most common risk of loss. Yet, in modern times with ever-changing and expanding risk profiles, fire is no longer the singular menace to property it once was. 

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California Wildfires and Related Insurance Claims Show No Signs of Stopping

“We can’t stop and we won’t stop.” Is this the refrain to a Miley Cyrus song, the creed of the thousands of firefighters currently battling California’s wildfires, or the mantra of the fires themselves? While any self-respecting Miley fan knows these are the lyrics to her hit “We Can’t Stop,” everyone who has seen the footage coming out of the California wildfires knows that the fires have been ferocious in their destruction, and the firefighters have been equally unrelenting in their efforts to contain them. Unfortunately, and fortunately, there is no wrong answer.

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Calif. Landslides Prompt 'Efficient Proximate Cause' Rehash

Mother Nature recently reminded California, as she often does, of how cruel she can be. In December 2017, the state experienced its largest wildfire in history.[1] The wildfire, known as the Thomas Fire, burned more than 281,000 acres in Southern California and destroyed more than 1,000 structures.[2] A month later, California experienced its heaviest rainfall in nearly a year.[3] Experts posit that the heavy rains, coupled with the absence of vegetation from the fires, triggered catastrophic mudflows that killed 21 people and caused significant property damage to homes and infrastructure.[4]

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The Boom Shift - Chemical Plant Explosion Claims and the Possible Adoption of Corporate Regulation Where Government Regulation is Absent

On the morning of March 15, 2018, a large explosion erupted at the Tri-Chem Industries chemical plant in Cresson, Texas, approximately 25 miles southwest of Fort Worth. The explosion left two workers badly injured and another presumed dead. According to 2017 Hood County records of the company’s chemical inventory, it has been reported that Tri-Chem’s Cresson plant stored chemicals that were toxic, flammable and corrosive yet the company had no emergency response plans in its files.

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Do Fires Cause Mudslides?

Most commercial and residential insurance policies contain exclusions for earth movement, flood or surface water. At first glance it may appear clear that these policies would not cover damage from a mudslide. However, as the recent mudslides in Santa Barbara County, California demonstrate, the answer may not be so clear. Those mudslides, which killed more than 20 people and damaged or destroyed hundreds of homes, followed the Thomas Fire that scorched almost three hundred thousand acres. 

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2017 – A Record Setting Year

2017 was a year of records for sure.  Most notably, professional eater Joey Chestnut set a new record by eating 55 glazed doughnuts in eight minutes.[1] At a university in Ohio, 972 people set a record by dressing as penguins.[2]  And, Ayanna Williams of Texas set a record thanks to her fingernails reaching a combined total length of 18 feet, 10.9 inches.[3] Unfortunately, the U.S. also set a record in 2017 with a total of $306 billion in damage resulting from several natural disasters. In fact, the 2017 season was the first time that three Category 4 hurricanes — Harvey, Irma, and Maria — made landfall in the United States and its territories in a one-year period.

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Sometimes CAT Insurance is Fun!

We noted this article in today’s New York Times, spotlighting FM Global’s Rhode Island research lab.  

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A Recipe for Disaster

Since November 23, 2016, the Chimney Tops and Cobbly Nob fires have wreaked havoc on Sevier County, Tennessee. These fires have burned through an estimated 17,000 acres and 2,400 properties. This disaster has taken the lives of 14 people and reportedly injured another 175 people. Adding to the emotional devastation and turmoil of this expansive threat, local authorities in Tennessee just announced that the arson investigation led to the identification and detainment of two juveniles whom they believe ignited the first blaze. While the news of the responsible parties for this horrible fire may have been surprising to many, the breadth of destruction that these fires left behind is not unexpected when examining basic facts about fires in the United States. Wildfires, along with their associated events (heat waves and drought), were responsible for the third highest rate of losses in the U.S. in 2015.

From 1995 to 2014, fires accounted for 1.5% of insured catastrophe losses, totaling about $6.0 Billion. The majority of wildfire-related costs are suffered in the State of California.

(Source: http://www.iii.org/issue-update/wildfires)

While California has reported the largest amount of estimated insured losses and number of wildfire-related incidents, other states have been identified as wildfire prone states. All in all, in the U.S., about 38 states are identified as wildfire risks.

(Source: http://www.iii.org/issue-update/wildfires)

The figures showing the frequency, severity and cost of these fires will likely continue to rise. The risk of wildfires is likely to continue to grow as temperatures rise, lengthening the fire season, and more people move into steep forested areas once largely uninhabited. Additionally, there is the human element.  According to the U.S. Department of Interior, as many as 90% of wildland fires in the United States are caused by humans. The confluence of causal factors is perfect kindling and a recipe for disaster.

Posted by Anaysa Gallardo Stutzman

Man-Made Cats

“The industrial world destroys nature not because it doesn’t love it but because it is not afraid of it.” 

- Mary Ruefle, American Poet

Most of the major catastrophes we read about, think about and worry about are natural occurrences:  hurricanes, floods, earthquakes, volcanic eruptions.  But man-made catastrophes do their own share of damage.  When they strike, they often grab their own share of attention.  The 9/11 terrorist attack stands as one of the largest insurance catastrophes in history – not to mention its far more devastating human impact.  But most man-made catastrophes are smaller in scale compared to what mother nature can deliver.  They can also stay under the radar, without headlines, without clear cause and effect, without a clearly defined impact.  They can be harder to trace and harder to quantify.  When an earthquake strikes, the resulting damage is apparent and the cause and effect are obvious.  Not always so with man-made events.

Case in point:  in 2015, forest fires and resulting haze in Southeast Asia were unusually widespread and extreme, and researchers this week released a study finding an incredible death toll:  “The forest fire and haze disaster in Southeast Asia last year may have led to the deaths of more than 100,000 people,” the New York Times reported.  “The vast majority of the cases were in Indonesia, where fires were deliberately set to clear land for agriculture.”  In 2015, the Indonesian government claimed only 19 of its citizens had perished due to the fires and haze.  The report released this week finds a much higher figure:  91,600 in Indonesia alone.

The study was published in Environmental Research Letters.  The study’s authors explained the root cause of the fires in 2015 and the resulting impact on human life:

 

Across Indonesia, fires are frequently used to burn agricultural residue, clear forest, or prepare land for plantations and smallholder farms. . . .   Fire emission levels are greatest from degraded peatlands, especially in dry years (Marlier et al 2015a, 2015b). In 2006, burning in industrial concessions to clear land for oil palm and timber plantations accounted for ~40% of total fire emissions in Sumatra and ~25% in Kalimantan (Indonesian Borneo) (Marlier et al 2015c).  

 

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The degraded peatlands that typically burn during such episodes contain significant combustible organic material and so release large amounts of fine particulate matter (PM_2.5), the leading cause of global pollution-related mortality (World Health Organization 2009, Lelieveld et al 2015). As in previous episodes, the prevailing winds in 2015 transported the smoke to densely populated areas across Indonesia and the Malay Peninsula, including Singapore and Kuala Lumpur.

 

Did most of us hear, in 2015, about the fires, the smoke, and the heavy presence of deadly particulate matter in population centers in Southeast Asia?  Did we hear that deaths were mounting, in the tens of thousands and as many as a hundred thousand?  No.  Nor, apparently, was that reality recognized anywhere before the release of the study in Environmental Research Letters. 

 

Similarly, the predictions of dire consequences for life and property as a result of Climate Change relate not only to high profile catastrophic events – like stronger and more frequent hurricanes – but to the more insidious long-term effects, including slowly rising seas, widespread droughts, and extremes of temperature, all of which cause death and damage that are not as visibly and obviously connected to the “catastrophe.”  But to the victims, the results are just as final.

Posted by Dan Millea